Automating Short-Term Payroll Savings: Evidence from Two Large U.K. Experiments

Automatic enrollment is often used to increase retirement savings. What are the effects of using it (or, alternatively, requiring an active enrollment choice) to increase short-term savings? We evaluate two experiments in the U.K. at employers that enable workers to set up payroll contributions to fund short-term savings accounts. In the first experiment (N = 7,404), employees at two firms were randomly assigned opt-in, opt-out, or active choice enrollment into the short-term savings program. Nine months later, participation was 48 percentage points higher under automatic enrollment than opt-in enrollment, and average balances were £114 higher. In the second experiment (N = 3,605), after years of offering opt-in payroll contributions to fund a short-term savings account, the employer changed to opt-out enrollment for new hires only. In tenure month 18, participation in the short-term savings program was 48 percentage points higher under automatic enrollment, and average balances were £193 higher.